Thinking Like A Woman Could Pay Off With Credit Cards

Women shop a lot: We make 85% of all consumer purchases, according to data from the research firms Yankelovich Monitor and Greenfield Online. All that shopping means we’re pulling out our credit cards often — and it turns out, perhaps thanks to all that practice, we really know what we’re doing.

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On average, women carry about $100 less credit card debt than men do ($5,536 versus $5,635), are less likely to be 60 or more days overdue on their credit card card payments, and have slightly higher credit scores (675 versus 670), according to the credit bureau Experian. “Women seem to be doing a better job at managing their credit,” says Kelley Motley, director of analytics at Experian.

Men might want to take a page from women’s credit card playbook by adopting these four credit card habits.

1. Don’t be scared to use credit cards responsibly

Women have 23.5% more open credit cards than men do, according to Experian. Despite that, women have lower average overall balances, which suggests they are opening more cards without maxing them out. In other words, they might be opening new ones to strategically score discounts or other benefits, but for the most part, they aren’t getting into trouble by running up massive balances with them. That means many women are reaping the rewards of credit cards — fraud protection, points, discounts — without winding up with crushing credit card debt.

“Rather than just using one card, they may be using different cards, with different rewards structures, to make certain purchases,” says Catey Hill, author of the forthcoming book “The 30-Minute Money Plan for Moms: How to Maximize Your Family Budget in Minimal Time.” “If you pay them off on time and in full each month, rewards cards, even multiple rewards cards, can be very lucrative.

2. Understand behaviors that can improve credit scores

Men were more likely than women to say they considered their credit score knowledge good or excellent — 61% vs. 54% — according to a recent survey by the Consumer Federation of America and VantageScore Solutions. But women were actually the ones who reported more accurate knowledge on many factors about how credit scores work. Women had a better understanding of how to raise a credit score and of the factors used in determining credit scores.

“Women might be slightly more conscientious than men about knowing and understanding their credit scores,” said Stephen Brobeck, executive director of CFA. And as for understanding the actions that can raise credit scores, including making on-time payments every month and maintaining a low credit utilization rate, “that’s the most critical information to have,” Brobeck said.

3. Get your free credit reports regularly

The CFA survey also found that women are more likely than men to understand the importance of checking their credit reports regularly, something all consumers can do for free at annualcreditreport.com. The reports do not include credit scores, but rather the details of one’s credit history. This makes it possible to spot any errors and work to correct them.

According to the survey, women may also be more likely than men to follow through and obtain their credit report — 67% of women said they’d done so, versus 63% of men.

4. Avoid delinquencies and maintain low, manageable balances

A late payment or delinquency can lower a credit score. Making regular monthly payments to keep all credit cards (and other accounts) in good standing is an important part of building a strong credit history.

“Women are typically the CEOs of their household and know how to stick to a monthly budget, manage day-to-day spending and pay bills on time,” says Kerry Hannon, personal finance expert and author of the forthcoming book “Money Confidence: Really Smart Financial Moves for Newly Single Women.” “When they sense they’re in debt or bumping up against a shortfall, they trim back their budget, slashing discretionary items like meals out or clothing purchases.”

That kind of fiscal conservatism helps prevent a buildup of credit card debt. Plus, keeping balances manageable can help improve your credit utilization ratio, which is a factor in your credit score.

After all, when it comes to your credit score, how you manage your money matters more than the size of your paycheck. While women typically bring home only about 80% of what men do, according to the American Association of University Women, they still come out on top when it comes to credit scores.

“It shows you don’t have to earn a ton to manage your money well, and that you can take control of your finances even on a smaller budget,” says Hill, the author.

In other words, shop like a woman and you might just end up with a better credit score.

Kimberly Palmer is a writer at NerdWallet, a personal finance website. Reach her at kpalmer@nerdwallet.com or on Twitter at @KimberlyPalmer.

I write about personal finance and credit cards at NerdWallet. I also wrote three books about money: "Smart Mom, Rich Mom," "The Economy of You," and “Generation Earn.” Previously, I was a money editor at US News & World Report and AARP. I love writing about money with t...